Fiat Industrial sweetens CNH merger offer

By Chris Sleight20 November 2012

Fiat Industrial (FI) has offered to pay a US$ 10 per share special dividend to CNH share holders as part of an improved offer to merge the two companies. FI has described the proposal as its “best and final offer” and has given CNH’s Board until the end of Wednesday (21st November) to recommend it to shareholders, after which it will be withdrawn.

FI already owns 88% of CNH, and it says it will defer its share of the special dividend, worth US$ 2.1 billion, to preserve the company’s capital base. Payments to the minority shareholders that own the remaining 12% of CNH would total US$ 293 million under the proposal.

The deal would also give stock holders 3.828 shares in the new company for every single CNH share they currently hold. However, FI shareholders would only receive stock in the new company on a one-to-one basis. This would mean that CNH’s minority shareholders would end up with a 5.1% stake in the new entity.

But even if CNH, and the special committee it has put together to scrutinise the merger proposal, does not recommend the new deal to its shareholders, FI said it would push ahead with integrating the two companies.

“While we believe that Fiat Industrial has offered fair and reasonable terms for the CNH minority, if our improved best and final terms remain unacceptable to the Special Committee, Fiat Industrial intends to move ahead and execute all permissible actions within its control, while at all times being mindful and respectful of the rights of CNH minority shareholders, in which it can achieve for its shareholders the benefits sought through strategic integration,” said FI Chairman Sergio Marchionne.

He continued, “Fiat Industrial will do so by further integrating operations and ensuring that intra-group dealings with CNH are on fully-priced arm’s length terms in order to reduce or eliminate any unintended transfer of value to CNH.”

CNH has not commented on the latest offer from FI.

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